The Purpose and Impact of the Welfare Benefits Reform

Article by Nisha Rikhi

We have seen in the national news over the past few weeks that there has been considerable discussion of the reforms that government is seeking to make to the welfare state. This article proposes to look at what the reforms are and the impact of those reforms.

We have already seen in recent months that the current Labour government is intent on reforming the welfare system. The DWP has already made Winter Fuel Payments means-tested, so only those pensioners who are in receipt of Pension Credit can receive this. This has saved the government a great deal of money by reducing the number of people eligible to receive it. Pension Credit is the benefit that helps pensioners who do not get the full state pension, topping up their income to £212.50 each week. By making it so that only those pensioners on Pension Credit can receive the Winter Fuel Payment, the government has drastically reduced the number of pensioners who will receive this extra support. The benefit of this reform is that it targets support to those who need it most, those who are the poorest pensioners.

The government has now gone further and announced several reforms to the welfare system. Most of these reforms focus on disability and incapacity benefits, with some reforms to the unemployment element of Universal Credit.

Unemployment:

The first part of the government’s reforms concerns the unemployment aspect of benefits. This is important because the government is changing the way the welfare system and the Jobcentre operate in order to focus more on supporting people into employment. As part of this change of focus, the government is reforming the unemployment benefits administered by the Jobcentre.

The government announced that it is seeking to merge Jobseeker’s Allowance with Employment and Support Allowance. The aim is to merge these two benefits into a new unemployment insurance that provides time-limited support to those who have paid National Insurance. This is a good idea as it incentivises people to enter paid work. If people know that they can only access unemployment insurance if they have made National Insurance contributions, it will make employment more attractive. It will also ensure that there is unemployment support available in the long-term if people suddenly lose their jobs. This major change to unemployment benefit is complemented by the changes being made to the Jobcentre service and Universal Credit.

The merging of the National Careers Service and Jobcentre Plus is a common-sense reform that will help focus the welfare system on supporting people into employment. This is because people who are unemployed will be able to receive support to claim Universal Credit and careers advice at the same time. Under the current system, the unemployed have to go to the Job Centre Plus to claim unemployment benefits and the National Career Service for employment advice. This doesn’t make sense as very often work coaches are helping people manage their Universal Credit claims and are coaching them back into work. Having the Job Centre Plus and the National Career Service as part of one single service makes more sense. This is because work coaches will be able to advise clients on getting jobs and attending interviews, as well as support them with their benefit claims. This should enable work coaches at Jobcentres to provide benefit claimants with more intensive support. Given that the Jobcentre administers the current system of Jobseeker’s Allowance, Employment and Support Allowance and Universal Credit, it is only sensible that they be given a greater hand in supporting claimants of these benefits into employment.

Universal Credit is the main unemployment benefit that is claimed by those out of work or on low incomes in this country. The government is now seeking to reform Universal Credit to better support those who are in employment and get those who are not working into work. Liz Kendall announced in her speech yesterday that the government will be resetting payment rates within Universal Credit. This is in a bid to make the social security system more pro-work. The standard element will be increased for all claimants. Increasing the standard element for all claimants will be a beneficial reform as it will make sure that every claimant receives decent financial support while they look for work.

However, the government is also going to make it harder for Universal Credit claimants to use the health element to avoid looking for work. The government is planning to reduce the financial incentive for people to avoid looking for work by freezing the health element for all current claimants. As a result, the government is breaking the link between being signed off as sick and getting more money than you would if you were merely unemployed. There will be a reduced financial incentive for the unemployed to actively seek to be deemed unemployed. The government is changing the way that Universal Credit operates so that work will never lead to a reassessment of the entire Universal Credit claim. This is reflected in one particular reform that the government is making to Universal Credit. The government is scrapping the work capability assessment. The effect of this is that extra financial support for health conditions will now only be assessed through PIP. This makes sense. It has never been sensible to have two assessments for incapacity benefits when one would work equally well for both Universal Credit and Personal Independence Payments.

Although the government is clearly trying to make it less financially appealing to be deemed unfit for work, they are promising that anyone who absolutely cannot work will continue to be supported. Liz Kendall promised that anyone with a severe, life-long health condition who will never be able to work will never be reassessed in the future. The government has said that while they are freezing the health element, there would be a new premium to support those with severe, life-long conditions who will never be able to work. To my mind, these two reforms are the most compassionate changes the government could make to the health element of Universal Credit. Nobody who is terminally ill or has a degenerative condition should face the prospect of intrusive reassessments. These are the most vulnerable people who should be supported by the state without question, and should receive the most support from Universal Credit.

The DWP is making a major reform to Universal Credit for young people. They are going to delay access to the health element until the age of twenty-two. This could be a very good reform as it disrupts the school to sickness benefit pipeline. There are too many young people who are not in education, training or work. It is a moral imperative that the government work to get as many young people off sickness benefits and into work. There are many young people currently on the health element of Universal Credit who could work or volunteer, and would benefit from doing so. At the moment, the current Universal Credit system traps young people on the sickness element which means that they never move into work after leaving school or college. That is simply unacceptable. Anybody of working age who can work should work and the government must reform Universal Credit so that young people are expected to move into work after school or college if they are able to do so.Forcing young people off state welfare and into training or employment can only be good for the young people and the economy at large. This is a reform that should be supported and brought into effect as soon as possible.

Disability:

With regards to those who are disabled, the government is making several reforms to the Personal Independence Payments (PIP), which is the main disability benefit for working-age adults. The eligibility criteria for PIP are going to be narrowed and the age at which people can claim PIP will be raised to 18. These reforms are sensible measures that should be supported by everyone. First of all, one is a child until the reach the age of eighteen therefore it is only reasonable to expect that the age at which you claim PIP would be the age at which you become a legal adult. Secondly, narrowing the PIP eligibility criteria will ensure that only those people with serious disabilities are able to receive this benefit. These two reforms should be supported by everyone. This is because we need to make sure that PIP is targeted at those who need it most and continues to exist in the long-term to support those people who suddenly find themselves disabled and in need of support.

In order to target PIP at those who need it the most the government has said that they will change the way PIP works to focus on those with higher needs and are doing this by creating additional eligibility criteria point. From the passage of the new legislation, only those claimants who score four points on one daily activity element will be eligible to receive the daily living component. As a result, this automatically reduces the number of people who can receive the whole PIP award. Any claimants who do not receive 4 points for an activity will lose part of their PIP. It can be argued that this will allow the government to focus support on those who are have the severest disabilities and therefore have the greatest need. This is a measure that we should all potentially support. It would reduce the number of people deemed unfit for work and it would increase the money available to support the most vulnerable disabled people.

The government is also attempting to simplify the PIP system by introducing a single assessment for those who claim this benefit. That means that people who are facing ill-health or disability will not constantly have to go through assessment processes. The government has said that those with permanent or degenerative conditions will not be assessed againwhile those with severe conditions will face reduced assessment requirements. This is common sense. People who have medical conditions which will never get better or improve should be granted life-long PIP awards and should not face repeated questions about their condition. For those who will have assessments, the government is planning to increase the number of face-to-face assessments and the frequency of reassessments. This could be beneficial as it would potentially create a more productive assessment process and allow for greater interaction between the claimants and the assessors. The overhaul to the assessment process would be a good idea as it would cut down on bureaucracy and could make the disability benefit system simpler and fairer for claimants.

Overall, after listening to Liz Kendall’s speech, it is clear that the government considers it an imperative to reform the welfare state. The government makes a powerful argument that it cannot continue to allow a significant number of young people to remain out of education, training or employment. It is also clear that the welfare benefit bill is no longer sustainable and that we as a nation can no longer afford it. This means that reforms are urgently needed to ensure the welfare state survives for the long-term. Therefore, it is clear that there is a convincing and compelling case for welfare reform, and for us all to support it.